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Croatian Economic Survey : Vol. 16 : No. 1 : April 2014 : pp. 161-185
Higher Education
in the Digital Age
William G. Bowen
Princeton, NJ: Princeton University Press, 2013, pp. 172
ISBN 978-0-691-15930-0
doi:10.15179/ces.16.1.7
William G. Bowen is President Emeritus of the Andrew W. Mellon Foundation,
former president of Princeton University and founding chairman of ITHAKA.1
Over his long career he has enriched academic (and general) community with
contributions on topics such as class inequalities in higher education, college
sports at all levels, and completion rates in higher education. He also gave a very
valuable perspective of what it means to be a president of a major university in
Lessons Learned: Reflections of a University President (Bowen, 2010).
In Higher Education in the Digital Age Bowen focuses on two major issues in
higher education today: rising cost of attending higher education institutions
and resorting to advances in digital technology as a possible way of alleviating
this problem. The book is based upon Bowen’s lectures “Cost and Productivity
in Higher Education” and “Prospects for an Online Fix”, given at Stanford
University in October 2012. In addition to discussing the main points of these
1 ITHAKA is a non-profit organization aimed at supporting academic community to use digital technologies in
advancing their teaching and research in a sustainable way.
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lectures, the book also incorporates comments by carefully selected educators
that address specific aspects of online learning.
First part of the book titled “Cost and Productivity in Higher Education” covers
the area of productivity and increasing costs in higher education.
“Cost disease” is a term coined by William J. Baumol and Bowen himself in
their study of performing arts (Baumol and Bowen, 1966). Basic idea is that “…
in labor intensive industries such as the performing arts and education, there is
less opportunity than in other sectors to increase productivity by, for example,
substituting capital for labor” (p. 3). On the other hand, throughout the economy,
wages for roughly homogeneous individuals have to increase at about the same
rate, thus making unit labor costs rise faster for performing arts and education.
Bowen cites Robert Frank’s observation (Frank, 2012: 3): “While productivity
gains have made it possible to assemble cars with only a tiny fraction of the labor
that was once required, it still takes four musicians nine minutes to perform
Beethoven’s String Quartet No. 4 in C minor, just as it did in the 19th century”.
Bowen acknowledges the complexity of defining productivity in a field such
as education. He refers, among other studies, to Jones et al. (2012: 2243) who
highlight the problem of productivity missmeasurement since “important
dimensions of service output such as accessibility and convenience – factors
that are greatly improved by IT – are difficult to quantify and rarely captured
by productivity metrics”. Consequently, he simply refers to productivity as
a ratio of two numbers. Productivity can be improved by measures of either
output enhancement (raising the numerator) or input converse (lowering the
denominator). In line with Jones et al. (2012) the author also mentions that over
the last 25 years IT has made an impact on the numerator (output-enhancing
measures) but in a way not captured by productivity measures or costs per
student. Furthermore, not all type of output were “hit” the same. IT revolution
has had a much more profound impact on research output (introduction of data
analyzing software, scholarly infrastructure, advances in communication etc.)
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than on students, whose “chalk and blackboard” class format has not changed
much until very recently.
Besides the cost disease, Bowen mentions three additional factors that have also
helped push the costs up. The first one is inefficiency in governing day-to-day
university activities. Centralizing some functions such as human resources, IT
and purchasing at the university level have reduced, or at least slowed down,
rising costs. However, Bowen remains cautious not to embrace too much of
this “corporate mindset” (p. 10) as it could endanger the quality of teaching.
Factors of production in higher education are anything but easily substitutable
(for example, highly specialized teaching staff cannot be easily substituted from
one class to another). Some of these institutional rigidities are the result of the
very nature of an academic enterprise.
Second factor relates to the desire to “buy the best”. The US universities are
known for their high degree of competitiveness for best candidates and best
departments, and although the author admits this to be one of the key reasons
why US universities are some of the best in the world, he expresses concerns
about increasing stratification among institutions. “Buy the best” mindset puts
extra pressure on the not-so-wealthy universities to go overboard on their budget
– a cost which is then usually transferred into higher tuition fees.
Third factor Bowen deals with is the supply side problem and mismatching. The
author refers to the paper by Bound, Lovenheim and Turner (2010) which shows
an increase in the time-to-degree (TTD) over the last three decades (localized
among public institutions outside the most selective institutions). Reasons
behind this include the decline in public resources and the tendency of students
to work more hours for wage. Student attitudes towards graduating on time are
another side of the medal. In Crossing the finish line study (Bowen, Chingos and
McPherson, 2009: 16) one recent graduate stated that “graduating in four years
was like leaving the party at 10:30 p.m.”. An increase in TTD is also caused by
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a large number of students who end up at institutions for which they are not
qualified i.e. a miss-match.
First chapter concludes with the discussion on affordability. Baum, Kurose
and McPherson (2013) show that in the US state support for colleges and
universities fell from 44 percent in 1980 to 22 percent in 2009. The only solution
to preserve teaching quality and enrollment numbers was to increase tuitions.
Despite this, parents’ and students’ attitudes towards obtaining a university
degree have not faltered. In the most recent Sallie Mae/Ipsos survey (Sallie Mae/
Ipsos, 2013) 85 percent of college students and parents stated that education
was an investment into the future. Mitchell (2012) reports that starting from
2010 student debt exceeded credit card debt. Pew Research Centre reported that
the average outstanding student loan balance was US$ 26,682 in 2010 among
all households with student debt, with the greatest relative burden of this debt
concentrated in bottom fifth on income distribution (Fry, 2012). The question
that arises is “What is the right amount of debt a student should take on?” Avery
and Turner (2012) explain that much depends on individual talents, choice of
major, institution attended, career interests, prospects etc. Their conclusion,
however, rejects the claim that student borrowing is too high across the board
(with possible exception of for-profit colleges).
Second part of the book “Prospects for an Online Fix” is focused on the potential
impact of different approaches to online learning, and whether it can be a “fix”
for cost disease.
In 2000 when Bowen gave a lecture at Oxford referring to studies from the
University of Illinois and Navarro (2000) he inferred that potential savings from
using technology to increase productivity are scarce. Thirteen years later William
G. Bowen has changed his stand on this issue. He justifies this “conversion” by
improvements in IT such as greater access to Internet, improvements in Internet
speed, reduction in storage costs, proliferation of sophisticated mobile devices
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and other technological advances that have paved the way for cost reduction in
online learning.
So what has to change to make online learning widely accessible and more
accepted by faculty and students? Bowen divided this issue under three headings:
lack of hard evidence about learning outcomes and potential savings; lack of
shared but customizable teaching and learning platforms; and the need for new
mindsets and fresh thinking about models of decision-making.
How effective is online learning in improving learning outcomes, or at least, in
maintaining them? Has introduction of online learning led to the reduction of
costs per student? Unfortunately, it is still uncertain. Bowen presents the study
carried out by ITHAKA to investigate online learning outcomes (Bowen et al.,
2012). The study was carried out using Statistics course developed by Carnegie
Mellon University, taught in hybrid mode (with one face-to-face Q&A session
per week). Final examination results were compared to students who took classic
face-to-face classroom format. Bowen reports two important results. First, there
is no statistically significant difference in learning outcomes between students
in different class formats; and second, this result is consistent across campuses
and subgroups of a sample. What about cost savings? Their results show a 3657 percent savings in compensation costs alone. This result should, however, be
interpreted with caution. As Bowen points out “A fundamental problem … is
that contemporaneous comparison of the costs of traditional modes of teaching
and of newly instituted online pedagogies are nearly useless in projecting steadystate savings…” (p. 51). Doing anything for the first time is much more costly
than repeating the well-established routine. Substantial start-up costs in online
learning involve: course development and IT equipment, costs of training
personnel for this new mode of teaching, transaction costs of switching to hybrid
mode etc. Furthermore, this study involved only one course, in a field well-suited
for online learning. Instead of just making a comparison between traditional
and online formats of learning, different modes of online learning should also be
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compared. Analysis should also extend to issues of space utilization, capital costs
and indirect costs.
For successful implementation of online learning, perhaps the most obvious
requirement is customizable, sustainable platform. But how much in-house
customization is actually needed? While Bowen acknowledges that “faculty are
extremely reluctant to teach courses that they do not own” (Bacow et al., 2012:
21), he makes a case that certain degree of standardization would be beneficial.
It would allow for economies of scale of well-developed features of platforms,
and additionally, some institutions simply do not have the manpower (or/nor the
brainpower) to start from scratch. Also, different platforms will be appropriate
for different courses. The notion of a single platform is quite unrealistic and illsuited for all courses (e.g. statistics course has completely different needs than
politics course). So, how should such platforms be developed? Bowen sees great
potential in collaborative effort within higher education community. Institutions
that have shown the capacity (and will) to execute should assume leadership
in these enterprises. He primarily sees the leading MOOCs (massive open
online courses) as possible leaders. Developers of Coursera, edX, and Stanford’s
Class2Go already have an impressive infrastructure, a pool of talented people at
their disposal, solid financial base and real standing in academic community.
The need for customization, however, will continue to be present. The reason
why these MOOCs had such success is because the one-size-fits-all policy drove
their marginal cost of serving one extra user (student) almost down to zero. It
is much more ambiguous how – or even whether – this need of customization
for local use would affect cost savings. An alternative option would be to let
the free markets provide best platforms suited for individual faculties. The main
risk here is that these for-profit organizations might choose to cover their costs
by privatizing significant amount of information about how students learn.
This information would be highly beneficial to researchers and faculty looking
to improve learning outcomes of their students and privatization would harm
potential gains in this externality. Educational community should agree about
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how such information depository should be created and maintained, as it would
surely serve “in the best interest of the public”.
Bowen argues that a new mindset is a prerequisite to overcome barriers to
adoption of online learning. Such barriers include fear that online instruction
will diminish faculty ranks and the fact that most faculties are alien to this kind
of teaching. There is also a grudge of financial pressures that come with the
implementation of such programs.
Finally, the author warns us not to overdo online learning and stresses the
value of “minds rubbing against minds”. Person-to-person and student-teacher
communication can serve as inspirational, life-changing experiences. After-class
or late-night student exchange can have a profound influence on one’s career and
worldview. Bowen advocates an adoption of a careful mix of instructional styles.
This mix will surely vary from institution to institution, with arts universities
adopting more in-person teaching and more quantitative institutions offering
more online courses. He also urges to retain the freedom of thought and reminds
us that universities should also teach values, as opposed to just knowledge.
Discussion by Howard Gardner: Howard Gardner focuses primarily on the
issue of residential education. He stresses the importance of in-person teaching
and reflection sessions where many students look for their role models, both
in peers and teachers, which can then shape their academic and work career.
Next, he moves on to discuss collaboration among higher education institutions.
He provides an example of three schools near Cambridge: Wellesley College,
Babson College and Olin College who serve as good complements to each
other as they all have different foci. In such interdisciplinary environment we
stand much better chances of rising up to the issue of sustainability. And the
collaboration should not stop there; it should go beyond national borders. Such
collaborations, he says, have an important influence on US students by exposing
them to different population and cultural setting. The future he would like to
see is one where having joint degrees, students work together on global problems
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that require interdisciplinary and intercultural thinking and share resources
over long distances. He agrees with Bowen that education should be extended
to incorporate teachings of values, as they are the ones that make us human. In
conclusion, he leaves us with a thought that technology can provide “the answers
to all questions – except the important ones” (p. 106).
Discussion by John Hennessy: Hennessy (re)examines a cost problem in education.
His chief concern is the role of financial aids and state subsidies. On one side,
financial aid has increased in high-end private institutions as a result of, in
accordance with Bowen, increase in the endowment which has grown about 6
percentage points above the higher education price index which is in turn 0.5 to 1
percentage points over the wage inflation index. Public institutions, on the other
hand, have seen significant reduction in government subsidies as a consequence
of budget cuts. On average, per-pupil funding in these institutions has decreased
by 15 percent. Setting aside the negative influence of 2008 financial crisis,
Hennessy also points out the quadrupling of spending in Medicaid over the last
thirty years, that diverged investment away from education. Future does not look
too bright as he sees more and more students paying tuition close to full sticker
price. Contrary to general opinion he believes it is not the increase in luxuries at
student dorms that drives up sticker prices but rather the changing nature of the
student body itself. An increase in psychological support services, community
centers and ethnically themed dorms easing the adjustment of foreign students –
all these factors lead to better learning outcomes, but they also come at a higher
cost.
Next, he points to a problem of a growing number of research institutions. Using
an example of Berkley University and San Jose State University, where the
former is more of a research-oriented institution while the latter is primarily an
educational institution, he calculated that cost per student at Berkley is estimated
at US$ 26,800 per year and at San Jose State US$ 11,800 per year. Teacherto-student ratios are 15:1 and 26:1, respectively. He concludes that education
in research-oriented institution is much more expensive and, unless some other
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source of income is found (e.g. good will of philanthropists), the US will have to
decrease the number of research institutions.
Completion rate for the six-year programs at public universities is about 55 percent
while at private institutions it is just over 60 percent. But the consequences of
non-completion are even worse. For a student who drops out it is very hard
to demonstrate associated competences s/he may have obtained just by being a
part of academic community. This extends into discussion about loan burdens
and defaults. Increasing costs drive up loan indebtedness and lack of completion
leads to greater probability of default. From 2006-2007 to 2008-2009 for-profit
default rate went from 9.8 to 15.4 percent.
Discussion by Andrew Delbanco: Delbanco starts off by presenting two
photographs from recent magazine covers. The first photograph is a metaphor
for public perception that college is “essentially expensive dating service for
pampered students” (p. 130). The reality is, however, quite different – about a
third of students are adults with families and jobs, who attend underfunded,
overcrowded community colleges with no luxuries. Yet the general opinion
described by the first photograph prevails, thus leading to lower public support
on spending in education and endangering the continuation of program
incentives for poor students. The second photograph presents a student who is
studying online from his home. Among other things, the most striking feature
Delbanco recognizes is the fact that he is alone. Any connection he has with his
peers and professors is a virtual one. He comments on a metaphor by Hennessey
who said that new technology will hit colleges and universities with the force
of a “tsunami”, comparing it to early Schumpeterian description of capitalism
as “creative destruction”. Using online revolution in alleviating cost disease is a
good thing, but, on the other hand, “tsunamis are not exactly known for their
selectivity” (p. 137).
Online revolution might increase extra institutional affiliations and loyalties
of faculty members. It reduces provincialism, dilettantism and institutional
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inbreeding, but it has also helped in elevating some professors to the status of
“stars” who demand high fees for their lectures, and some institutions towards
making their own rules about teaching loads, business venture etc. He even goes
so far as to say that some teaching, like languages, might completely be replaced
by technology (for example, French speaking Siri on iPhone).
Delanco’s chief concern rests on the educational value of these new online
learning technologies. He makes a distinction between the instruction and
provocation and (re)states it in many ways: facts versus knowledge, skills versus
wisdom, information versus insight… Current US educational system is already
moving towards the instruction end of the spectrum, and online technologies
would only add momentum to this process. In teaching humanity it makes
little sense to categorize classes as “introductory” and “advanced” - the emphasis
is, and should always be, on interpretation. Can online education teach both
kindness and cleverness? Let’s hope so.
Discussion by Daphne Koller: Why is this increase in online learning happening
now? Koller claims there has been a shift in educational paradigm, i.e. online
learning should not try to simply replicate everything being done in-class, but
should move towards developing entirely new platforms and systems of learning.
The greatest advancement we can now utilize is the possibility of interaction
between students and materials, ruling out passive one-way communication
as outdated and unsuited for today’s educational needs. She emphasizes that
students “rubbing minds” with each other is not endangered – it would be wrong
to apply standards and methods of previous generations to this new “cyber”
generation. An interaction via electronic media is an indistinguishable part of
modern culture, and we should not presume, based on the way we were brought
up, that rubbing of minds can only happen face-to-face.
New formats of online learning, which allow for constant feedback to student,
are much more interactive than full auditorium of students and one teacher,
providing a better chance for completion. Data collected from such feedback,
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generated by almost every click of a mouse is then stored, analyzed, and can be
used to further enhance software packages and learning platforms.
Another opportunity presents itself for potential students who have not yet enrolled
in higher education or professionals outside academic institutions. MOOCs
could provide them with an opportunity to take classes prior to enrollment
so they would be well on their way when they actually enroll. Furthermore,
they can explore multiple MOOCs to get the general impression of the courses
before making a final enrollment decision. This would help increase completion
rates and also alleviate mismatch mentioned in Bowen’s talk. For professionals
this makes lifelong learning more accessible and increases their competitiveness
on the labor market. Outcomes may also be improved by allowing colleges to
expand their curricula beyond those offered only in-house by offering online
courses from other institutions.
Finally, similarly to Gardner, Koller too steps outside US borders by stating
that about two-thirds of current MOOC students are from abroad. In this way
students and faculty get a perspective of life and culture in the rest of the world
which can have a profound influence on their ways of learning and teaching. On
a global scale, more educated people would mean fewer problems with hunger,
unemployment, extremism and even population explosion.
Final thoughts
I think the book Higher Education in the Digital Age by William G. Bowen gives
a very good description of the basic concepts and issues in higher education.
As President Emeritus of Princeton University (1972-1988) and the Andrew W.
Mellon Foundation (1988-2006), Bowen speaks with the voice of experience,
often illustrating with personal examples from his career. Although online
learning can be thought of as relevant worldwide, with the exception of general
productivity analysis, this book offers little to scholars outside the US. A deeper
study of the materials in the book (and the lectures), together with very informative
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set of endnotes, give a realistic picture of the higher education in the US and its
main challenges. This is surely a consequence of the fact that this book started
off as lectures given at Stanford University, so Bowen adjusted the material for
the audience accordingly. While primarily concentrating on the reasons behind
rising costs of higher education Bowen fails to mention some alternative funding
models, such as State of Oregon’s “Pay it Forward” pilot program which allows
students to forego taking out loans and debt, but they agree to pay the state back
a small portion of their future income over the course of a couple of decades
(White, 2013). Throughout the book, Bowen resists the temptation of explicitly
saying that online education can remedy the problems of costs and productivity
in higher education, but rather he offers an insight into promising, and still quite
unexplored, area for innovation regarding the affordability and merits of higher
education. What he sees as particularly promising, and worth pursuing, is the
“hybrid” approach, a mix of online learning with typical face-to-face “classroom
teaching” sessions. Although he presents some evidence that outcomes would
not suffer as a consequence of switching to online learning, he acknowledges
that much more empirical testing is required before fully switching to “flipped
classroom”. He also acknowledges that some areas, like arts and humanities,
will never be able to become fully digitized because of the very nature of such
programs. Towards the end of the book he urges the public and academic
community not to get too carried away by the media frenzy created lately about
the use of online learning. Implemented unadvisedly it can certainly bring more
harm than merits. Inclusion of comments by other educators and Bowen’s replies
give an extra value to the book, as it brings forth a sense of academic debate and
offers views from a perspective different from Bowen’s. These commentators were
carefully weighted with Gardner and Delbanco as IT sceptics who emphasize the
concepts of value and provocation, Hennessy who stresses out the parallel problems
of growing sticker price and student indebtedness, and low completion rates,
and finally Koller who speaks of online revolution with unmatched enthusiasm.
The mere fact that Bowen decided to finish the book with such captivating talk
of benefits of online learning speaks of his preferences as well. Finally, Higher
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Education in the Digital Age is a must-read for all education researchers interested
in online learning as it represents a valuable source of both ideas and references
for future studies.
Literature
Avery, Christopher and Sarah Turner, 2012, “Student Loans: Do College
Students Borrow Too Much – or Not Enough?”, Journal of Economic Perspectives,
26(1), pp. 1-30. http://dx.doi.org/10.1257/jep.26.1.165
Bacow, Lawrence S., William G. Bowen, Kevin M. Guthrie, Kelly A. Lack and
Matthew P. Long, 2012, “Barrier to Adoption of Online Learning Systems in
U.S. Higher Education”, http://www.sr.ithaka.org/sites/default/files/reports/
barriers-to-adoption-of-online-learning-systems-in-us-higher-education.pdf
(accessed March 6, 2014).
Baum, Sandy, Charles Kurose and Michael S. McPherson, 2013, “An Overview
of Higher Education”, Future of Children, 23(1), pp. 17-39. http://dx.doi.
org/10.1353/foc.2013.0008
Baumol, William J. and William G. Bowen, 1966, Performing arts-the economic
dilemma: a study of problems common to theater, opera, music and dance, New
York, NY: The Twentieth Century Fund.
Bound, John, Michael F. Lovenheim and Sarah Turner, 2010, “Increasing Time
to Baccalaureate Degree in the United States”, NBER Working Paper, no. 15892,
Cambridge, MA: NBER.
Bowen, William G., 2010, Lessons learned: Reflections of a university president,
Princeton, NJ: Princeton University Press.
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Bowen, William G., Matthew M. Chingos, Kelly A. Lack, and Thomas I.
Nygren, 2012, “Interactive Learning Online at Public Universities: Evidence
from Randomized Trials”, http://www.sr.ithaka.org/sites/default/files/reports/
sr-ithaka-interactive-learning-online-at-public-universities.pdf (accessed March
6, 2014).
Bowen, William G., Matthew M. Chingos and Michael S. McPherson, 2009,
Crossing the finish line: completing college at America’s public universities, Princeton,
NJ: Princeton University Press.
Frank, Robert H., March 10, 2012, “The Prestige Chase Is Raising College
Costs”, New York Times, http://www.nytimes.com/2012/03/11/business/collegecosts-are-rising-amid-a-prestige-chase.html?ref=todayspaper&_r=0
(accessed
March 6, 2014).
Fry, Richard, 2012, “A record one-in-five households now owe student loan debt”
Pew Research Center, http://www.pewsocialtrends.org/files/2012/09/09-26-12Student_Debt.pdf (accessed March 8, 2014).
Jones, Spencer S., Paul S. Heaton, Robert S. Rudin and Eric C. Schneider, 2012,
“Unravelling the IT Productivity Paradox – Lessons for Health Care”, New
England Journal of Medicine, 366(24), pp. 2243-2245. http://dx.doi.org/10.1056/
NEJMp1204980
Mitchell, Josh, May 31, 2012, “Student Debt Rises by 8% as College Tuitions
Climb”, Wall Street Journal, http://online.wsj.com/news/articles/SB1000142405
2702303640104577438252890217584 (accessed March 7, 2014).
Navarro, Peter, 2000, “Economics in the Cyberclassroom”, Journal of Economic
Perspectives, 14(2), pp. 119-132. http://dx.doi.org/10.1257/jep.14.2.119
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Sallie Mae/Ipsos, 2013, “How America Pays for College 2013: Sallie Mae’s
National Study of College Students and Parents”, https://www.salliemae.com/
assets/Core/how-America-pays/howamericapays2013.pdf (accessed March 8,
2014).
White, Martha C., July 17, 2013, “Oregon’s “Pay It Forward” Program: Imagine
College with No Tuition, No Loans, No Debt”, Time, http://business.time.
com/2013/07/17/oregons-pay-it-forward-program-imagine-college-with-notuition-no-loans-no-debt/ (assessed March 15, 2014).
Bruno Škrinjarić
The Institute of Economics, Zagreb
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